Obama to Unveil Health Care Plan

May 29, 2007 — Ron Chusid

We have the first clues about the type of health care plan to expect from Barack Obama. The information in the first media reports are sketchy, but Obama follows the general trend among Democratic candidates to advocate universal health care based upon our present insurance system. Obama’s plan has many of the features of John Kerry’s 2004 plan, including using aspects of the plan offered to members of Congress and reinsurance for catastrophic cases, but adds a mandate. Kerry’s plan had the advantage of consisting of voluntary methods to increase access to health care coverage, but fell short of providing universal coverage. Mandates have the obvious problem of placing government requirements on individuals and businesses, but also solve the problem of cost shifting caused by the uninsured. Universal coverage also increases the number of healthier individuals in the insurance pool, reducing the cost required to insure each individual.

Preliminary reports also note that Obama’s plan will prevent insurance companies from excluding individuals for pre-existing conditions. There’s no word as to whether he will change to community wide rating, or if insurance companies could still limit care to those with medical problems by charging prohibitive premiums as commonly occurs now. There’s also no word as to whether the plan will do anything about those who currently have insurance but are under-insured due to inadequate plans. Obama will include a National Health Insurance Exchange to monitor insurance companies but there is no clear information yet as to what aspects of insurance will be more heavily regulated.

While there is a mandate for individuals and businesses, Obama proposes benefits on a sliding scale to assist in purchasing the insurance. Other cost savings aspects include improved use of electronic medical records and increased concentration on management of chronic diseases. He estimates that the plan will save $2500 for the average person now purchasing health insurance.

Update: A little more information is coming out. There may not actually be an individual mandate, which is preferable from a libertarian standpoint but could be detrimental from the point of view of a smaller risk pool. The National Health Insurance Exchange will not only regulate insurance companies, but will also offer an alternative product for those who do not qualify for programs such as Medicaid, but who do not receive insurance through their employers. This would include the self-employed, and small businesses would have the option of utilizing it. Private insurances will be required to meet the same standards as the new plan.

This raises far more questions than it answers. The plan sounds similar to John Edwards’ proposal to create a new plan modeled on Medicare. It is not clear what Obama’s plan would be like. There would be a tremendous difference between offering a plan comparable to Medicare, as opposed to a plan modeled more after Medicaid. One difference is that Edwards would have his new plan compete with all insurances, while it appears that those covered by employers will not have this option under Obama’s plan. Of course, should there be demand to allow others in, this could easily be changed.

Obama deserves continued credit for including a provision to end the waste of the Medicare Advantage plans, which I’ve already commended him for. Another notable difference is that, while John Edwards addressed malpractice in 2003-4, his current plan does not, raising questions if this is a payback in response to all the money Edwards is bringing in from the trial lawyers. Obama does include a call for malpractice reform in his plan.